Ties to Enron Pose Vexing Problem on Campaign Trail

It seemed like a productive day for Elizabeth Hanford Dole. She was in Houston last September for a speech, and an influential supporter pulled together a luncheon fund-raiser at a snazzy hotel for Dole’s U.S. Senate campaign in North Carolina.

Dole, the race’s likely Republican nominee, went home with a tidy $20,000. But now she’s paying an unexpected political price. The host of that fund-raiser was Kenneth L. Lay, then-chairman of the still-solvent Enron Corp. And given the company’s financial collapse, Democrats are all over her for it.

“Another day, another Enron-Dole connection,” the state Democratic Party said in a recent news release, taking note of reports that a top Dole strategist also lobbied for Enron. On Friday, the party started airing a television ad attacking Dole for “conducting fund-raisers at the house of a scoundrel.”

Dole, wife of 1996 GOP presidential candidate Bob Dole and herself a White House aspirant in the 2000 race, makes a high-profile target. But she is not alone in having to cope with Enron on the campaign trail.

Even as Congress prepares to ask more questions about Enron during several hearings next week, politicians throughout the country are having to explain their ties to a company that has become a national symbol of corporate greed, mismanagement and influence peddling.

In Senate campaigns in Minnesota, Colorado and Texas, Republicans already have had to deal with Enron-related issues. Indeed, many Democrats see GOP links to the company as a topic that can play to their strengths--and help them overcome the daunting political challenge posed by President Bush’s wartime popularity.

“Enron has the potential to shape the entire political environment for 2002, impact other issues and reduce confidence in the Bush administration and Republicans,” said a recent analysis by three Democratic consultants, including James Carville, President Clinton’s onetime political aide.

Yet Enron is becoming a burr under the saddle for politicians of both parties, even the safest incumbents. The 188 House members who received Enron-related donations include 71 Democrats, and 29 Democrats were among 70 senators getting such contributions.

Many of these politicians have opted to return their Enron-related donations or give the money to a fund established to help the company’s former workers or other charities. But even those who have kept the contributions know what side of the issue they want to be on: “against” Enron. The trick is how to get there.

Questions about Enron have been particularly felt in Texas, where the Dec. 2 bankruptcy filing by the home-state company affected thousands of voters. In the lively race to succeed retiring Sen. Phil Gramm (R-Texas), Enron connections could cause trouble for the expected GOP nominee, state Atty. Gen. John Cornyn.

Cornyn has received between $150,000 and $200,000 in Enron-related contributions over the years--most directly from Lay--and has refused to give back any of the money. He sided with the company in a regulatory dispute last year. But in January, to avoid an appearance of any conflict of interest, Cornyn withdrew from the state’s investigation of Enron’s collapse.

“He wrote a favorable legal opinion for Enron in September, but now that the state is a creditor of Enron, he has thrown up his hands,” said Robert Gibbs, spokesman for the Democratic Senatorial Campaign Committee.

But Democrats’ hands are not entirely clean: Rep. Ken Bentsen, one of several candidates in the Democratic Senate primary, has received $44,750 from Enron and its executives since 1989, according to the nonpartisan Center for Responsive Politics. Bentsen has given $3,000--the most recent donation received from Enron’s political action committee--to the fund for the company’s employees.

Far from the Texas epicenter, the Enron controversy erupted last month in Minnesota, where Democratic Sen. Paul Wellstone is in a tough fight for reelection against St. Paul Mayor Norm Coleman, who was recruited to run by Bush.

Mike Erlandson, chairman of the state’s Democratic Farm Labor Party, recently criticized Coleman for accepting $2,500 from the PAC of Enron’s accounting firm, Andersen. He challenged Coleman to take a stand on a series of Enron-related policy questions.

The Coleman campaign responded by alleging that Wellstone had accepted a contribution from Andersen’s political action committee in his 1996 campaign. Wellstone’s campaign denied that, saying it only received a donation from an accountant who worked for Andersen.

In Colorado, Democratic Senate candidate Tom Strickland has spotlighted an accounting proposal that many believe might have prevented some of Enron’s problems. He criticized Sen. Wayne Allard, a Republican seeking reelection, for signing a letter two years ago opposing new rules that would have set stricter conflict-of-interest standards for accounting firms. An Allard spokesman said the senator had simply sought a delay of the rules to allow more time for congressional study.

Strickland’s campaign manager, Brian Hardwick, responded: “Unfortunately, it appears that the request effectively killed the reform.”

In House campaigns, Democrats are expected to try to build on anger fueled by the Enron case to highlight votes last year by GOP incumbents that favored an economic stimulus bill that included a big tax break for the company. A preview of that argument can be seen in a recent ad in South Dakota, in which Senate Majority Leader Tom Daschle (D-S.D.) responds to critics who held him responsible for blocking the measure.

“Why are they spending so much money promoting an economic stimulus plan that allows some big special interests to avoid paying any taxes and gives Enron a $250-million tax cut?” the pro-Daschle ad asked.

Dole has taken a two-pronged approach in responding to criticism of her Lay-sponsored fund-raiser, which surfaced in the media in mid-January. Of the $20,000 she collected, she sent $5,000--the amount her campaign estimated came from Lay, his wife and the Enron PAC--to the Enron employee fund. But she kept the rest. Her campaign spokesman said that money came from non-Enron sources.

The Dole fund-raiser has become controversial not just because of its Enron connection but also because it happened Sept. 20, when most politicians had suspended fund-raising activities because of the Sept. 11 terrorist attacks. In the ad that started airing Friday, the North Carolina Democratic Party charges: “Sept. 11. Elizabeth Dole promises she will put her campaign on hold, but then on Sept. 20, flies to a secret fund-raiser hosted by Kenneth Lay.”

Mary Brown Brewer, Dole’s communications director, said the candidate had promised only to suspend her “public campaign” and did not consider the fund-raiser a public event.